Amid a fiscal crisis, Arroyo Grande weighs options


Arroyo Grande’s projected deficit spending could bankrupt the city in five years, according to a 10-year financial outlook presented to the City Council last month.

A projected 52 percent increase in employee retirement expenditures and a 62 percent increase in the cost of working with the Five Cities Fire Authority have escalated the city’s deficit spending projections. As a result, city staff is asking the council to consider a combination of spending reductions and revenue creating options.

City staff is recommending a thorough review of fire service options which include contracting with CalFire, working with the Five Cities Fire Authority or having a city run fire department. In addition, city officials are considering staff reductions, eliminating park and recreation services and contracting out services.

Last week, the council began to consider selling off city owned properties, raising fees and raising taxes.

The city is facing a deficit of $583,000 during the 2018/2019 budgets years, $1.7 million in the 2020/2021 budget years and $3.4 million in the 2027/2028 budget years, according to the city financial forecast. Under current budget projections, the city is slated to deplete its current reserve of $7 million by 2023.

Mayor Jim Hill warned that the quality of life in Arroyo Grande will decline if the council does not  consider promoting new businesses and closing some fire stations.

“The other elephant in the room is the Five Cities Fire Authority and the 60 plus percent cost increase there, which in my view is unsustainable,” Hill said. “We need to make Arroyo Grande a business friendly place.”

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11 Comments about “Amid a fiscal crisis, Arroyo Grande weighs options”

  1. Boldguy says:

    Enjoying the comments, but what is the cure for a problem that is going to grip every community in the state eventually.
    If i was on the council, my suggestion would be to put all existing employee’s on Social Security with a generous 401K plan, that would give existing and future employee’s a say in their investment portfolio, plus their retirement age would be set by Social Security, in essence they would be in the same boat as us mere mortal tax payers.
    Next I would pay CalPers, only the amount that is based on their promised returns of 7.5%, let them make up the difference for their mismanagement.
    My proposal would take bold leadership, but hey that’s who I am:)

  2. perk o late says:

    Let’s not forget just how long Jim Guthrie sat on the council along with Karen Ray, Tony Ferrara, and Kristen Barneich as the dire financial situation we face marched toward inevitable doom.
    Another huge waste of money? Examine the amount the city has spent on legal fees, with ZERO to show for it.
    Hill seems to be the only forward thinker of the group but is outvoted by the females at nearly every turn.

    1. ArroyoGrande2000 says:

      And how much has been wasted on report after report about what to do with Brisco, just so some Ferrara holdouts at the city continue to try and get their roundabout that most feel is to expensive, shown to be more expensive than other options, and not needed. Plus how much as been wasted on reports about replacement of the old bridge downtown, with finances as they are, what needs to be done is what provides a usable bridge at the lowest cost, stop wasting money on a fancy dressing for the bridge.

  3. Otis says:

    The present financial problem facing Arroyo Grande will be simply solved. The first step is that suggested by ex-Council member Jim Guthrie’s, that the Council focus only on the forecasted current annual budget. That simply budgets the forecasted revenue. The City must not sell its assets or depleted its reserves.

    The real issue here is the fact that the City is becoming too expensive for the service it renders. The major issue here is the prioritization of important expenses of which the police services are major. There is ample evidence that the Fire Authority proposed budget is worthy of challenge. Retirement plans pushes the expense curves to absolutely ridiculous levels compared to all businesses in the area. Again, the City has become too expensive for the services it renders. If the present Council cannot solve the problem now in this election year, it should be replaced.

    1. perk o late says:

      No business-and the city is a business, can absorb cost increases like those looming over AG for the FCFA and employee benefits. This is a financial disaster years in the making. Selling assets would give the city some breathing room for a short time, but until expenses are brought under control AG will be facing the same problem within no time. Then what, if you’ve nothing left to sell off?
      Cuts, cuts, cuts and it WILL hurt.

    2. insidelookingout says:

      One of the main reason that people want to have an incorporated city is for the protection emergency service. It is always predictable that when there is a financial crisis blooming that politicians and staff will say that it’s because of the police and/or fire. That is the panic environment that they want to create because the main reason for a city is for those services. Eventually they will want more money, when have they not, and predict that will cure the problem. Every city within the county that has a looming negative financial condition pending should appoint a board of qualified financial experts to independently go over the book and analyze them as if they were a business. Believe me the private sector would solve the problem and make the difficult financial decisions that are required. The country club style of life needs to be monitored. A very good example of the future is exactly what happened in San Luis Obispo. The city manager buries the city financially and then leaves with no reprimand or anything and just moves on to the next cherry patch. We are only seeing the beginning of the local downfall of what will be happening all over California. The excessive government retirements are unsustainable anyway you look at.

  4. ArroyoGrande2000 says:

    First step, a minimum 20% salary and benefits cut for all city employees, no fancy bookkeeping to slide the cut into extra vacation or sick leave or such, second suspend all spending for travel and attendance to conferences, retreats and such and any meeting that requires travel. After that we can talk about cutting service but not before.

  5. perk o late says:

    Has anyone else noticed just how early public employees retire? We’re on the hook for a lot of retirement years for these folks.

  6. Boldguy says:

    It’s a very complicated issue, lied to yes, so were the cities.
    CalPers became a political body instead of a investment portfolio manager, sold off their stocks that performed well because they didn’t meet the political correctness test, reinvested in political correct investments that surprise surprise, didn’t have positive returns!
    Bernie Madoff is in jail for the same type of ponzi scheme.
    The elephant in the room is that existing retirees need to be given a benefit cut, before it’s to late!
    Google City of Loyalton, they could no longer make their CalPers payments, CalPers slashed existing City pensioners by 60%:(
    It’s heading to point that cities will be providing no City Services to make their CalPers payments, that truly is not fair to the Public.
    The Public paid for services through fee’s and taxes, with expectations of a certain quality of life and were not part of the squandering the money away!
    Realigning the Fire Departments is not a fix for the real problem.

    1. insidelookingout says:

      If you check the budgets of most cities you will find that approximately 75% of the General Fund budgets go toward employee costs. With the CalPers rates scheduled to keep rising the end result is that the 75% costs will also increase I don’t have the numbers although I think they are available. 2 things will happen. First there will be far less funds in the General Fund to provide services to the public as those funds will be used to pay for employees along with other unfunded liabilities that will be due. And then of course there will be a cry of foul and that the only way anything financially can be addresses is by an increase in fees, taxes or possibly bonds. The big losers are the people who will probably lose services AND at the same time be subject to additional fees etc.. Appears that some of our local mudholes may be turning into swamps and may have to be drained and cleansed.

  7. Bm7 says:

    We should all get used to these types of stories. All California government entities are going bankrupt due to the unfunded defined benefit programs they have. All government employees should be part of social security and have a 401k option like the regular folk. We have been lied to and scammed for decades!

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